American workers celebrated this year, their Labor Day under a tension of trade war and economic recession. However, two years ago the growth was in the rise, thanks to the Donald Trump administration booster. Unfortunately, this last quarter is looking bleak for the economy of the first economic world economy, that seems faint of the effect of the trade war with China.
Since coming to power, the Trump administration has already created 5.5 million jobs in the economy. And the Gross Domestic Product reaches 2.9%, the level reached in 2015 on President Obama’s administration. The stock market is in green. Also, President Trump’s tried different economic strategies to increase American exports and reduce imports, including tax cuts for the wealthiest one.
Make America Great Again
To succeed in making America great again, President Trump launched trade wars with the rest of the world. First, he begins with Mexico and Canada, its closest neighbors. He denounces the North American Free Trade Agreement and convinces both partners to renegotiate it. Then, the Republican President threat to increase the import tariffs from those countries, if the United States is not in an advantageous position.
Trade between the United States and China
However, most of this trade war is between the two giants of the world economy. The United States and China. In fact, these two countries have one of the largest trade volumes in the world. Their trade generates $737.1 billion in 2018. However, the trade balance of the United States is in deficit compared to China. Since for every dollar of exports to China, the United States imports for $3. Consequently, President Trump sets off a trade war against his competitor to change the trade trend.
A trade war with an inappropriate method
President Trump is very influential in his trade wars. He has had some good results, especially against South Korea, Japan, and Mexico in particular. However, the method of doing is not compelling and becomes unbearable for both the American and Chinese markets. The worst part of this case, President Trump thinks to have a magic wand to result in the issue. A principle that is about a quarter of a century old in the field of trade between China and the United States, where each country is interdependent.
By this effect, every threat that the American President makes to China the New York Stock Exchange falls. In fact, theses threats do not only concern China. But also the American billionaires, which their companies established in China for decades. It is also a threat to American shareholders who invested their money in those American companies. It will also be a loss of income for American business who depend on its manufactured products to satisfy the need of the local market.
With China’s rising manufacturing tariffs, companies have to supply themselves at a higher price. For this reason American businesses have no choice, otherwise, adjust the selling price to minimize their losses. As a result, the American consumers will be the main victim of this war, because his purchasing power will be reduced, and growth within the country will only weaken.
